The accompanying condensed consolidated financial
statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations
of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note
disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant
to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2016 filed with the SEC. The condensed consolidated balance sheet as of December 31, 2016 included
herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including
notes, required by GAAP.

In the opinion of management, the accompanying
unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present the Company's financial
position and results of operations for the interim periods reflected. Except as noted, all adjustments contained herein are of
a normal recurring nature. Results of operations for the fiscal periods presented herein are not necessarily indicative of fiscal
year-end results.

The condensed consolidated financial statements
and all relevant footnotes have been adjusted as of the earliest period presented to reflect the discontinued operations of our
Eat at Joe’s restaurant (see Note 7).

The Company was incorporated as Conceptualistics,
Inc. on January 6, 1988 in Delaware. Subsequent to its incorporation, the Company changed its name to Eat at Joe’s, Ltd.
In February 2015, the Company changed its name to SPYR, Inc. and adopted a new ticker symbol “SPYR” effective March
12, 2015.

The primary focus of SPYR, Inc. (the “Company”)
is to act as a holding company and develop a portfolio of profitable subsidiaries, not limited by any particular industry or business.

Through our wholly owned subsidiaries, SPYR
APPS, LLC and SPYR APPS, Oy, we operate our mobile games and applications business. The focus of the SPYR APPS subsidiaries is
the development and publication of our own mobile games as well as the publication of games developed by third-party developers.
As of October 5, 2016, SPYR APPS, Oy ceased business activities and completed the dissolution process on October 18, 2017.

Through our other wholly owned subsidiary,
E.A.J.: PHL Airport, Inc., we owned and operated the restaurant “Eat at Joe’s®,” which was located in the
Philadelphia International Airport since 1997. Our lease in the Philadelphia Airport expired in April 2017. Concurrent with expiration
of the lease the restaurant closed. Our plan is to complete a tax free exchange of our intellectual property related to our restaurant
operations, including the registered trademark: “Eat at Joe’s®,” and related furniture, fixtures
and equipment to our wholly owned subsidiary, Branded Foods Concepts, Inc. (“Branded Foods”), in exchange for common
shares of Branded Foods. We expect Branded Foods will register its common stock under Section 12g of the Securities Act on Form
10 and thereafter become a fully reporting independent company. Pursuant to current accounting guidelines, the assets and liabilities
of EAJ as well as the results of its operations were presented in these financial statements as discontinued operations.

The accompanying financial statements have been prepared
under the assumption that the Company will continue as a going concern. Such assumption contemplates the realization of assets
and satisfaction of liabilities in the normal course of business. For the nine months ended September 30, 2017, the Company recorded
a net loss from continuing operations of $8,735,000 and utilized cash in continuing operations of $3,385,000. As of September 30,
2017, our cash balance was $285,000 and we had trading securities of $22,000.

The
Company’s restaurant, Eat At Joes closed in April 2017, concurrent with the expiration of the lease. However, the
Company plans to expand its mobile games and application development and publishing activities, such as Pocket Starships, through
acquisition and/or development of its own intellectual property and publishing agreements with developers.

On September 5, 2017, we negotiated a revolving line
of credit loan agreement with a company controlled by our Chairman and majority shareholder. The line of credit allows the Company
to borrow up to $500,000 with interest at 6% per annum. Repayment on the loan is due February 28, 2018. As of September 30, 2017,
we have borrowed $200,000.

We estimate the Company currently has sufficient
cash and liquidity to meet its working capital needs for its fiscal year 2017. Historically, we have financed our operations primarily
through private sales of our trading securities or through sales of our common stock. If our sales goals for our products do not
materialize as planned, we believe that the Company can reduce its operating and product development costs that would allow us
to maintain sufficient cash levels to continue operations. However, if we are not able to achieve profitable operations at some
point in the future, we may have insufficient working capital to maintain our operations as we presently intend to conduct them
or to fund our expansion, marketing, and product development plans. There can be no assurance that we will be able to obtain such
financing on acceptable terms, or at all.

The preparation of financial statements in
conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions used by management affected
impairment analysis for trading securities, fixed assets, intangible assets, capitalized licensing rights, amounts of potential
liabilities and valuation of issuance of equity securities. Actual results could differ from those estimates.

The Company’s computation of earnings
(loss) per share (EPS) includes basic and diluted EPS. Basic EPS is calculated by dividing the Company’s net income (loss)
available to common stockholders by the weighted average number of common shares during the period. Diluted EPS reflects the potential
dilution, using the treasury stock method that could occur if securities or other contracts to issue common stock were exercised
or converted into common stock or resulted in the issuance of common stock that then shared in the net income (loss) of the Company.
In computing diluted EPS, the treasury stock method assumes that outstanding options and warrants are exercised and the proceeds
are used to purchase common stock at the average market price during the period. Shares of restricted stock are included in the
basic weighted average number of common shares outstanding from the time they vest.

The basic and fully diluted shares for the
nine months ended September 30, 2017 are the same because the inclusion of the potential shares (Class A – 26,909,028, Class
E – 318,654, Options – 6,270,000, Warrants – 1,200,000) would have had an anti-dilutive effect due to the Company
generating a loss for the nine months ended September 30, 2017.

The basic and fully diluted shares for the
nine months ended September 30, 2016 are the same because the inclusion of the potential shares (Non-vested Common – 83,333,
Class A – 26,909,028, Class E – 163,415) would have had an anti-dilutive effect due to the Company generating a loss
for the nine months ended September 30, 2016.

Capitalized licensing
rights represent fees paid to intellectual property rights holders for use of their trademarks, copyrights, software, technology,
music or other intellectual property or proprietary rights in the development of our products. Depending upon the agreement with
the rights holder, we may obtain the right to use the intellectual property in multiple products over a number of years, or alternatively,
for a single product.

Significant management judgments and estimates
are utilized in assessing the recoverability of capitalized costs. In evaluating the recoverability of capitalized costs, the assessment
of expected product performance utilizes forecasted sales amounts and estimates of additional costs to be incurred. If revised
forecasted or actual product sales are less than the originally forecasted amounts utilized in the initial recoverability analysis,
the net realizable value may be lower than originally estimated in any given quarter, which could result in an impairment charge.
Material differences may result in the amount and timing of expenses for any period if management makes different judgments or
utilizes different estimates in evaluating these qualitative factors.

During 2017, the Company capitalized $175,000
pursuant to a licensing agreement for the non-exclusive, limited right to incorporate certain intellectual property (IP) from various
STAR TREK television series in to future updates to and expansions of the Pocket Starships game. The Company estimates that
the IP will have an estimated life of 1.6 years, which approximates the term of the license. In addition, we also acquired the
game titled Battlewack: Idle Lords for $100,000, pursuant to settlement with the game owner and developer. Battlewack: Idle Lords
requires additional development before it can be released.

In a prior period, the Company capitalized
$50,000 as a result of the acquisition of licensing rights of one gaming application. The Company estimates that the gaming application
will have an estimated life of five years, which approximates the term of the license.

During the period ended September 30, 2017,
the Company recorded amortization expense of $50,000 pursuant to the terms of these licensing rights. As of September 30, 2017
and December 31, 2016, the unamortized capitalized licensing rights amounted to $166,000 and $268,000 respectively.

Costs incurred for software development are
expensed as incurred. During the nine months ended September 30, 2017 and 2016, the Company incurred $1,202,000 and $760,000 in
software development costs paid to independent gaming software developers.

In May 2014, the Financial Accounting Standards
Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is
a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current
U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies
recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require
additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts,
including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.
ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in
annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition
to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is in the process
of evaluating the impact of ASU 2014-09 on the Company’s financial statements and disclosures.

In February 2016, the FASB issued Accounting
Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding
lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim
and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition
approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest
comparative period presented in the financial statements, with certain practical expedients available. The Company is in the process
of evaluating the impact of ASU 2016-02 on the Company’s financial statements and disclosures.

Other recent accounting pronouncements issued
by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities
and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future
consolidated financial statements.

Disclosure of accounting policy regarding (1) the principles it follows in consolidating or combining the separate financial statements, including the principles followed in determining the inclusion or exclusion of subsidiaries or other entities in the consolidated or combined financial statements and (2) its treatment of interests (for example, common stock, a partnership interest or other means of exerting influence) in other entities, for example consolidation or use of the equity or cost methods of accounting. The accounting policy may also address the accounting treatment for intercompany accounts and transactions, noncontrolling interest, and the income statement treatment in consolidation for issuances of stock by a subsidiary.

Disclosure of accounting policy for computing basic and diluted earnings or loss per share for each class of common stock and participating security. Addresses all significant policy factors, including any antidilutive items that have been excluded from the computation and takes into account stock dividends, splits and reverse splits that occur after the balance sheet date of the latest reporting period but before the issuance of the financial statements.

The entire disclosure for the nature of an entity's business, major products or services, principal markets including location, and the relative importance of its operations in each business and the basis for the determination, including but not limited to, assets, revenues, or earnings. For an entity that has not commenced principal operations, disclosures about the risks and uncertainties related to the activities in which the entity is currently engaged and an understanding of what those activities are being directed toward.

Disclosure of accounting policy pertaining to new accounting pronouncements that may impact the entity's financial reporting. Includes, but is not limited to, quantification of the expected or actual impact.

The entire disclosure for the general note to the financial statements for the reporting entity which may include, descriptions of the basis of presentation, business description, significant accounting policies, consolidations, reclassifications, new pronouncements not yet adopted and changes in accounting principles.

The entire disclosure for quarterly financial data. Includes, but is not limited to, tabular presentation of financial information for fiscal quarters, effect of year-end adjustments, and an explanation of matters or transactions that affect comparability of the information.

Disclosure of accounting policy for its research and development and computer software activities including the accounting treatment for costs incurred for (1) research and development activities, (2) development of computer software for internal use, (3) computer software to be sold, leased or otherwise marketed as a separate product or as part of a product or process and (4) in-process research and development acquired in a purchase business combination.

Disclosure of accounting policy for revenue recognition for licensing fees, which is consideration paid to the entity (licensor) by another party for the right to use, but not own, certain of the entity's intangible assets. Licensing arrangements include, but are not limited to, rights to use a patent, copyright, technology, manufacturing process, or trademark.

The entire disclosure when substantial doubt is raised about the ability to continue as a going concern. Includes, but is not limited to, principal conditions or events that raised substantial doubt about the ability to continue as a going concern, management's evaluation of the significance of those conditions or events in relation to the ability to meet its obligations, and management's plans that alleviated or are intended to mitigate the conditions or events that raise substantial doubt about the ability to continue as a going concern.